Two years ago, you purchase a house of $100,000. You borrow amortgage with 80% of LTV (loan to value ratio). The annual interestrate on the mortgage is 6%. Payments are being mademonthly, and the loan tem is 30 years. You have foundanother lender who will refinance only the currentoutstanding loan balance at 4.5% with monthly payments for30 years. The new lender will charge three discount points and therefinancing cost is equal to $3,000. Note that the points andrefinancing cost will be from your own pocket

What is your monthly payment for the current loan?

$429.64

$479.64

$529.55

$599.55

What is the new loan amount if you choose to refinance?

$70,974.59

$77,974.59

$87,468.24

$97,468.24

What is your monthly payment for the new loan?

$368.57

$408.57

$425.09

$395.09

What is annual effective cost of the new loan if holding theloan for 30 years?

4.882%

5.116%

6.016%

6.116%

Should you refinance today if you hold the loan for 30years?

Yes

No

The effective costs for the two loans are the same, so eitherway is OK

Not enough information

If the new lender will allow you to refinance thecurrent outstanding loan balance plus all the costs associated withthe new loan, what is your new loan amount if you chooseto refinance?

$73,103.83

$83,313.83

$90,523.96

$83,478.96